Correlation Between RETAIL FOOD and Atrium Ljungberg

Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and Atrium Ljungberg at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RETAIL FOOD and Atrium Ljungberg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RETAIL FOOD GROUP and Atrium Ljungberg AB, you can compare the effects of market volatilities on RETAIL FOOD and Atrium Ljungberg and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RETAIL FOOD with a short position of Atrium Ljungberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Atrium Ljungberg.

Diversification Opportunities for RETAIL FOOD and Atrium Ljungberg

0.39

Correlation Coefficient

RETAIL FOOD  Atrium Ljungberg

Weak diversification

The 3 months correlation between RETAIL and Atrium is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Atrium Ljungberg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Ljungberg and RETAIL FOOD is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RETAIL FOOD GROUP are associated (or correlated) with Atrium Ljungberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Ljungberg has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and Atrium Ljungberg go up and down completely randomly.

Pair Corralation between RETAIL FOOD and Atrium Ljungberg

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the Atrium Ljungberg. In addition to that, RETAIL FOOD is 1.51 times more volatile than Atrium Ljungberg AB. It trades about -0.21 of its total potential returns per unit of risk. Atrium Ljungberg AB is currently generating about 0.12 per unit of volatility. If you would invest  1,666  in Atrium Ljungberg AB on October 26, 2024 and sell it today you would earn a total of  58.00  from holding Atrium Ljungberg AB or generate 3.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

RETAIL FOOD GROUP  vs.  Atrium Ljungberg AB

RETAIL FOOD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RETAIL FOOD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Atrium Ljungberg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Ljungberg AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Atrium Ljungberg is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RETAIL FOOD and Atrium Ljungberg

The main advantage of trading using opposite RETAIL FOOD and Atrium Ljungberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, Atrium Ljungberg can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Atrium Ljungberg will offset losses from the drop in Atrium Ljungberg's long position.

The idea behind RETAIL FOOD GROUP and Atrium Ljungberg AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.